Finances, Sponsorship, Investment, Esports & Digital Sport, Europe, Global

‘We have that ability to reinvent ourselves’: Fnatic’s Sam Mathews talks esports expectations

A funding round of US$10m and a crowd equity campaign has capped off a busy 2020 for Fnatic, the London-based esports organisation. Speaking to SportsPro, the company’s CEO and founder Sam Mathews reflects on the year and what to expect in 2021.

by Ed Dixon
‘We have that ability to reinvent ourselves’: Fnatic’s Sam Mathews talks esports expectations

When all is said and done, 2020 really has been quite the year for esports and gaming.

From filing the void left by traditional sports during lockdown to a record 2.9 billion people playing games on their mobiles, the collective industry has been able to put together quite the highlights reel.

That is not to say it has been entirely plain sailing. Of note, Covid-19 has caused market researcher Newzoo to revise the projected global revenues for the esports industry down from an initial US$1.1 billion to US$950.3 million, while the pandemic has also resulted in competitive gaming joining its real-world counterparts in holding events behind closed doors.

Be that as it may, the outpouring of investment, increased tournament viewing figures and ardent global fanbase seen over the last year have shown us that esports is well set to continue on an upward curve.

Scrolling through the Fnatic website then, it is little wonder to see ‘esports is the future’ emblazoned across on one of the pages. That cause for optimism was strengthened earlier this month when the UK-based organisation announced it had achieved US$10 million in an internal funding round, taking its total amount raised to nearly US$35 million.

The fresh capital will help usher in further brand building opportunities, but the long-term direction of Fnatic will also be set by its own followers. The company recently unveiled a crowd equity campaign with crowdfunding platform Crowdcube, enabling Fnatic fans to invest in the business and further the competitive gaming movement.

To find out more about Fnatic’s fundraising activity, SportsPro spoke with the organisation’s chief executive and founder, Sam Mathews, who also gave his thoughts on what lies ahead for the wider esports sector in 2021.

What is it about esports that appeals to investors?

People, and especially our investors, really believe in the long-term vision of esports where every year more games are coming in, mobile has exploded, and there's compounding year-on-year growth. If you look back to the 1990s and football media rights it was really not very big. But look at it today, it's ginormous.

These are patient investors and, ultimately, there's a lot of scale potential. It's almost as if they realise this is like buying into a football team, tennis, rugby, whatever, but it’s all-encompassing and can be global. There's plenty of options for growth and the business has got all of the foundations, including adding a whole new management team in the last two years. Fnatic is really set up for scale and that's what this period we're going into now is all about.

Why was there a desire to set up a crowd equity campaign?

It's something we've wanted to do for a while. We always thought it would be amazing if you could've invested in your favourite sports team early on and owned a piece of the growth that they had over the last 30, 40 years. That's kind of our mentality. The only way that modern brands are successful is by bringing their community along with them. You can see that with super successful brands like Gymshark or Supreme. They're very good at activating their community.

For us, it's asking how do we get our community providing real feedback and feel like they’re incentivised to give us that feedback and work with us and make our product better, and how we entertain them better. We spoke to the chief marketing officer of Monzo and he gave me an interesting titbit that basically said that all of their crowdfunding investors – I think they had over 40,000 – were by far the most engaged people on their products and up to three times more engaged.

At the end of the day, in the scheme of how much we've raised, this is not going to be a significant amount. But it will potentially be, with UK£20 investments, thousands and thousands of super engaged, loyal fans helping us build a global business. 

Fnatic reached the quarterfinals of this year’s League of Legends World Championship

Are you targeting specific regions to grow Fnatic or will you spread the net evenly?

Fnatic is predominantly European-based but we do have a number of international efforts going on, including Japan where we have our Rainbow Six: Siege team playing often there. We also have products in distribution over there. On top of that, we have the South East Asian Dota 2 team as well.

Overall though, it's not really about regional expansion. That is a part of it in the future but most of the funding and efforts in the following years is going into the HPU [High Performance Unit], which we've set up. As a brand, we're laser focussed on how to make gamers better and the reality is that there's a lot of work still to be done in understanding the full and holistic picture of what makes those incremental benefits that then make a superstar.

If you think about things like sleep tracking or nutrition or fitness, alongside gaming setup and the equipment used, we’re at the very earlier stages of understanding each of the areas that we can make improvements on. Part of it is going to be developing this HPU.

Off the back of that, we obviously make our own hardware and esports equipment. That's enabling us to effectively take some of those learnings and implement that in the products that we're making and providing effectively to every consumer. The philosophy is really about providing accessible performance to all. 

How would you reflect on 2020 for Fnatic and the wider esports industry?

Regardless of Covid, if you think about what's happened this year, we've signed a multi-year deal with BMW, we've done the first ever esports fashion collaboration working with Gucci, we're releasing award-winning hardware, and I’m so excited with the people we've added to the team. So, it's been a tough year dealing with the outside world but in the inside world we've manged to have some really big success. 

Obviously, there have been challenges around esports with event cancellations, getting our players around, and so on. But, luckily, it's been very resilient. We've been able to get significant viewership gains on most of the tournaments we've participated in. The brands have also become more interested and engaged because that's one of the only ways they've been able to actually do a significant amount of content. 

It's been a mixed bag but I would say net positive for esports and definitely for Fnatic.

PlayerUnknown’s Battlegrounds has helped fuel the surge in mobile gaming

Are you looking to expand into other titles?

We're always exploring titles. We wait for the right factors, whether it's viewership, fan appeal, number of players on the game, regional specialties – some games are really big in some regions and not others. It's something that we are constantly evolving and I think next year will be no different.

We'll probably be entering one or two new titles. We've got our eyes on some of the mobile titles in Asia specifically. Halo is also releasing a new game next year, which could be interesting. This is a constant evolution and I think that's what is different about us [compared] to traditional sports. We have that ability to go into the next big game and reinvent ourselves and create a new franchise within that game. That's something which is quite unique about the esports landscape. 

How do you work with nonendemic brands to help maximise value?

The big difference between us and traditional sports is that we kind of act as rights holder, talent management and content activation partner. We’re basically like a one stop shop for these brands.

That's just how it's evolved in esports. We're creating the content and editing it, we're running the events, we're doing the online stuff, because we know the audience better than anyone. We have direct access to players, the fanbase, and talent.

When we talk to nonendemic brands, it's really about understanding their goals. We've been lucky enough to hire a bunch of people in our partnerships [team] who've come from nonendemic brands. They know how to speak to them, how to measure the right things and put them in frameworks. It's never a one stop solution, you're always creating different packages, different content ideas. Some [companies] just want to do events, some just want to do content, some just want a logo on show. It's really just down to each individual brand. 

Fnatic wants fan investments to help build a global business

How prevalent is mobile gaming going to become in esports over the next few years?

It's massively expanded over the last two or three years. If you look at PUBG [PlayerUnknown’s Battlegrounds] in India, that basically brought esports to the country. Before that, it was very inaccessible. Not many people had consoles, not many people had PCs. Mobile gaming really provided an opportunity for people to get that first experience of esports.

It is actually very competitive and the reality is that games are getting better all the time, devices are getting better. Next year, we're going to see a massive rollout of League of Legends: Wild Rift, the mobile version of League of Legends.

What we think is going to happen is esports is definitely here to stay on mobile. If you look at the amount of people online, something like 53 per cent of the world have a mobile phone. There's still a ton of penetration to come. This is still early stages for esports.

What are Fnatic’s main goals for 2021?

For us, 2021 is really about solidifying our position as an esports performance brand. We're very clear cut that we're not a typical sports team on its own. We're also making products that make gamers better and that's a big part of our proposition.

So, in 2021, you'll see us release not only the physical products, and more of them, but also physical clothing which is more performance orientated, and digital products. There will be a ton of content around all of this stuff.

Nike, for example, is an amazing performance brand in running, or there’s Rapha in cycling, and there isn’t really that brand that is there to try and advance the performance element of esports. Our goal is to make sure that we can make that performance accessible to all and, in doing so, make our teams better, make our brands happy and make better products.